Biden Demands the Impossible of Ukraine: End Corruption

Sept. 23, 2016 Sanctions against Russia aren’t working and the U.S. is forced to consider a new approach.

By George Friedman

U.S. Vice President Joe Biden has said that unless Ukraine overcomes its problems with corruption soon, the United States might have no choice but to abandon sanctions against Russia, Reuters reported yesterday. He pointed out that five unnamed European countries were opposed to continued sanctions and that any one of them could veto sanctions by the European Union. Given that sanctions have to be renewed by the end of the year, this doesn’t give Ukraine much time to abandon a very old national tradition.

The problem for the United States is that it supported replacing the old Ukrainian regime precisely because it saw the old regime as corrupt. Whether the United States really expected a change depends on who you spoke to. From my point of view, corruption was so deeply embedded in Ukrainian culture that it could better be called a way of life than a criminal deviation. But it was the major justification for backing demonstrators against the old regime and defending the new regime against Russia’s reaction.

The United States has a moralistic streak that manifests in odd ways. There are regimes the United States will not cooperate with because of corruption. There are also regimes where it will intervene in some way to make them less corrupt. And it will pass laws against Americans doing business with some of these regimes. Along with corruption, the U.S. opposes regimes that display brutal oppression. The United States intervened in Libya to end brutality and corruption. It is not obvious that the situation has improved. It is rare to find a situation where the U.S. has intervened in a country and achieved the desired outcome. Ukraine isn’t one of them.

The United States’ other problem is managing its failures – something with which it has some experience. Sanctions were imposed on Russia to try to force it to stop acting against Ukraine. The narrative was that Ukraine was a struggling liberal democracy fighting its corrupt oligarchs, while facing Russian aggression. The sanctions didn’t work in the sense that the Russians continued to pursue their course and, it might even be said, increased their aggressiveness. The United States likes to impose sanctions when it doesn’t want to do anything more decisive. Sanctions sound impressive but don’t put the target in a position where it might respond in unpleasant ways. The sanctions bothered Russia, but compared to the decline in oil prices, they hardly registered.

But abandoning the sanctions would make the United States look weak – even though imposing sanctions as a response to Russian aggression was already a sign of weakness. Agreeing to abandon sanctions without reciprocal Russian concessions would be a defeat for the United States. But Russia is not in any mood to make concessions. First, Russia is under deep economic pressure and needs foreign policy victories for domestic psychological reasons. Second, Russia has no reason to make concessions. It has lived with the sanctions thus far, and Europe is unlikely to continue with them much longer since they are causing serious problems there, perhaps as much as in Russia.

Biden clearly understood this problem, claiming that five European countries were ready to veto sanctions. Russian media reported that these countries were Cyprus, Austria, Hungary, Italy and France. I don’t know if this is true, but a lot of business is conducted between Russia and the European Peninsula, and its disruption has had consequences. Russia buys many goods from Europe, from agricultural products to machinery. The sanctions have disrupted the trade and at a time when economies around the world are sluggish, even small increments of exports matter.

Britain will likely be leaving the EU due to Brexit and some figures in Europe have spoken of expelling Hungary from the bloc because of its stance on immigration. If the EU, whoever the remaining members might be, continues sanctions on Russia, the cost will be unevenly spread. The EU’s ace in the hole has always been the subsidies given to some countries. But as the cost of membership rises, the attractiveness of remaining in it will decline.

The United States does not want to see the EU fragment. To the extent that the United States relies on NATO, it requires a roughly aligned Europe. In addition, the financial crisis Europe is facing can always impact U.S. markets in some way. No matter the barriers in place, Europe cannot have a financial crisis without affecting the United States. The U.S. cannot do much to solve the financial crisis, but it is willing to do what little it can.

The United States has a complex relationship with Germany. U.S. and German strategic interests do not align in many cases, but to the extent the U.S. doesn’t want chaos in Europe, Germany is the center of gravity that can hold it together. At the same time, it would not like to see Germany and Russia too close. Nevertheless, Germany is now entering a dangerous phase of economic danger, and the U.S. can’t welcome German instability. Germany and Russia have long maintained close economic relations and Germany is uneasy with the sanctions, moving in different directions on them at the same time.

The primary stated goal for the U.S. – creating a Ukraine without widespread corruption – has failed, and it was always obvious it would fail. The United States’ other goal was to prevent Russia from dominating Ukraine, but the sanctions are of little value in achieving that. They are hurting several European countries and the enthusiasm for them, never particularly great, is now reaching the point where the Europeans will abandon them. But the U.S. doesn’t want an EU rejection of the sanctions regime to be the reason it abandons this tactic. So Biden has opened the door for a U.S.-led end to the sanctions by stating that Ukraine must remake its soul in the next few months or the sanctions might be eliminated.

The question of how Russia will approach Ukraine without the sanctions was not addressed in Biden’s comments. But the sanctions were clearly not a decisive force. For Russia, Ukraine is of fundamental interest as a buffer against the West. For the Americans, Ukraine is of fundamental interest as a buffer against the east. The United States cannot get a corruption-free buffer, but it could likely negotiate a neutralization of Ukraine, in which Ukraine can have a Western-friendly government and economic ties with the West, but would not align itself militarily with the U.S. and EU. In return, Russia would abandon its insurrection in eastern Ukraine – which is not going anywhere anyway – and find some formula in Crimea for maintaining its original treaty rights there with some political accommodation.

Abandoning sanctions before they abandon the United States makes sense. But it is an ad hoc solution, in which the Europeans are driven to a decision by the need for unanimity, and the U.S. is compelled to abandon a policy because of the EU’s internal dynamic. In my view, the sanctions were always both ineffective and unimportant, but how they are abandoned matters in terms of the perception of U.S. reliability. In the meantime, the U.S. should stop asking nations to do things they can’t do. Ukraine is Ukraine, and unlike the United States, which has no corruption anywhere (or so it would like to believe), Ukraine does have a great deal. And this won’t change.